Ørsted suspends dividend, cuts jobs and exits offshore wind markets

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Ørsted has suspended its dividend and slashed targets for developing renewables as the world’s largest offshore wind developer plots a recovery following a calamitous 12 months.

The Copenhagen-listed company said on Wednesday it would also cut up to 800 jobs and withdraw from offshore wind markets in Norway, Spain and Portugal, marking a retreat after several years of aggressive expansion.

Chief executive Mads Nipper said the moves were necessary to turn Ørsted into a “leaner and more efficient company” after a surge in interest rates and challenges in the US left it with multibillion-dollar impairments.

The cut to its 2030 target for installed renewable electricity capacity from 50 gigawatts to 35-38 gigawatts comes as economies around the world have increased their targets for clean energy to hit emissions goals. Each gigawatt of capacity can potentially supply about 1mn homes.

Nipper said he remained confident in the global transition to renewable energy, arguing the company needed a “reset” to restore investor trust.

“We are very confident we can create value and we can deliver the plan in a robust way,” he said. “This is not only what our investors need but also what the green transformation needs — a green energy industry in good shape.”

As the group, which is 50.1 per cent owned by the Danish government, tries to stabilise itself, chair Thomas Thune Andersen will step down after almost a decade in the job.

His exit comes after former finance chief Daniel Lerup and chief operating officer Richard Hunter left in November. The company employs about 9,000 people globally.

Once a darling of the stock market and an example of an oil and gas company successfully transitioning to renewable energy, Ørsted’s share price has fallen more than 70 per cent since peaking in 2021 at the height of investor frenzy over environmentally friendly stocks.

The company’s shares slipped almost 2 per cent in early trading on Wednesday. Analysts at RBC said Ørsted “now needs to execute on various components of its plan”.

Its struggles reflect the pressures facing the wider offshore wind industry, which investors had championed until higher interest rates, overly ambitious expansion plans and supply chain disruption hit the sector over the past two years.

However, Ørsted has been particularly exposed in part because of its aggressive, early expansion into the still embryonic US market, where it has struggled to get tax credits and complained of onerous requirements for parts to be made locally.

Nipper said the company had “felt the impact of market challenges over the past few years” but had “learned from these challenges and implemented significant changes”.

He said the company was “seeing good signs” that some of the challenges in the offshore wind industry were receding, with installation vessels and factories being built or expanding, which would ease supply chain challenges.

Vestas, the world’s largest wind turbine maker, on Wednesday announced a return to profitability, reporting pre-tax earnings for 2023 of €78mn following a €1.7bn loss in 2022, reflecting a healthier supplier chain after several years of squeezed margins.

Governments have also increased the prices they are willing to pay for offshore wind, including in the UK where Ørsted last year decided to press ahead with one of its largest offshore wind projects, Hornsea 3 off the Yorkshire coast.

Ørsted announced its strategic update alongside its annual results, reporting a net loss for 2023 of DKr20bn ($2.9bn) including the impairment losses and fees to cancel projects in the US.

With those elements stripped out, it made net profit of DKr14.9bn. Nipper said there had been “strong underlying business progress”.

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